NO. 89 EASTERN DISTRICT APPEAL DOCKET, 1982, Appeal from Judgment of the Superior Court, No. 2459, October Term, 1978, dated June 25, 1982, Affirming in Part and Quashing in Part the Appeal from the Order of the Philadelphia Court of Common Pleas, Civil Action - Equity, No. 2168, February Term, 1978 Opinion and Order Dated September 19, 1978, Dismissing SEPTA's Preliminary Objections, 301 Pa. Superior Ct. 161,
Hutchinson, Justice. Larsen, J., files a Concurring Opinion. Nix, C.j., did not participate in the consideration or decision of this case.

Author: Hutchinson

[ 505 Pa. Page 393]

OPINION OF THE COURT

Southeastern Pennsylvania Transportation Authority (SEPTA) appeals by allowance an order of Superior Court*fn1 affirming Philadelphia Court of Common Pleas' denial of SEPTA's preliminary objections challenging its jurisdiction to hear and decide the case.*fn2 We affirm.

[ 505 Pa. Page 394]

I.

The sole question for our consideration is whether a public employee is totally precluded from obtaining any relief directly or indirectly, involving his public employer, for discharge in arguable breach of a collective bargaining agreement when the union has violated its duty of fair representation by failing in bad faith to pursue his grievance to impartial arbitration. SEPTA bases its main argument on its interpretation of Ziccardi v. Commonwealth, 500 Pa. 326, 456 A.2d 979 (1982), arguing that Common Pleas lacked jurisdiction over Martino's equity suit against SEPTA for wrongful discharge because Section 903 of the Public Employe Relations Act (PERA), Act of July 23, 1970, P.L. 563, No. 195, 43 P.S. § 1101.903, makes grievance arbitration the public employee's exclusive remedy against a public employer for breaches of the bargaining agreement and does not compel the signatories to the bargaining agreement to proceed to arbitration.

We held in Ziccardi that generally an employee cannot seek reinstatement directly from a court even though the union's failure to pursue a discharge to arbitration was in bad faith. However, where necessary to provide a meaningful remedy by arbitration, when that remedy is denied by the union's fraud or bad faith, the employer can be joined in the employee's action against the union for its bad faith breach of fiduciary duty and the chancellor may fashion an appropriate equitable remedy which would permit grievance arbitration nunc pro tunc.*fn3

[ 505 Pa. Page 395]

II.

SEPTA discharged Martino on August 4, 1977 alleging that he made improper fare collections. Pursuant to a collective bargaining agreement between SEPTA and the Union, the Union processed Martino's grievance through the three permitted levels of grievance hearings. The Union represented Martino at each hearing and each hearing resulted in a decision against Martino. The Union then declined to seek impartial arbitration which is the statutorily prescribed remedy under the collective bargaining agreement for grievances unresolved by the three step internal procedure.

In his complaint, Martino sought relief against SEPTA for allegedly discharging him in violation of the collective bargaining agreement. He also sought relief against the Union for alleged breach of its duty of fair representation in, inter alia, failing to submit his discharge case to arbitration. He further claimed that he had exhausted the remedies available to him under the collective bargaining agreement. In Count Two, Martino claimed that his discharge was unsupported by competent or substantial evidence and that SEPTA based its decision at the grievance hearings on irrelevant and immaterial evidence. Martino did not allege that SEPTA had in any way participated in the Union's breach of its duty of fair representation. Here he seeks an order compelling the Union and SEPTA to participate in an arbitration proceeding nunc pro tunc and he also asserts a claim against SEPTA under 42 U.S.C. § 1983.*fn4

procedure, concluding that Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967) and Falsetti v. Local Union No. 2026, UMWA, 400 Pa. 145, 161 A.2d 882 (1960) had reached diametrically opposite conclusions and for that reason, the jurisdictional issue was not clear and free from doubt.*fn5 Superior Court affirmed en banc on reargument holding that Common Pleas had jurisdiction of the controversy because it fell within the general class of cases within Common Pleas' original jurisdiction and the contractual grievance procedure did not oust Common Pleas of jurisdiction.*fn6

Unlike the aggrieved employee in Ziccardi, Martino seeks arbitration of his grievance rather than a direct contract

[ 505 Pa. Page 397]

remedy against his employer. In Ziccardi we did not consider nor did we preclude joining the employer where necessary to provide a just and effective remedy.*fn7 In cases of the type we consider here, the employer approaches the status of an indispensable party to the litigation in the sense that the dispute cannot be finally resolved with equity and good conscience without his participation. See Shell Development Co. v. Universal Oil Co., 157 F.2d 421 (3d Cir.1946); Pa.R.C.P. 1032.

We therefore further define Ziccardi by holding that an employee may seek in equity under either our state or federal law by joining his employer where the union breaches its duty of fair representation when such joinder is necessary to afford him an adequate remedy. However, the union's misconduct should not deprive the employer of all the procedural and substantive benefits of the bargained for grievance procedure, a procedure which PERA mandates. Therefore, we also hold that the employee's relief under PERA is limited to an order from the chancellor compelling arbitration of the underlying grievance. The imposition of that limitation and its restriction to cases seeking relief under PERA requires an examination of the development of the federal law in this area and its relation to our state policies concerning public sector bargaining.

Both before and since Vaca v. Sipes, 386 U.S. 171, 87 S.Ct. 903, 17 L.Ed.2d 842 (1967), the United States Supreme Court has vacillated on whether an employee has a right to judicial relief under federal law for breach of contract against his employer when his union improperly fails or refuses to arbitrate his grievance, as well as on the nature of the relief to which he may be entitled.*fn8

[ 505 Pa. Page 398]

In Falsetti v. Local Union No. 2026 United Mine Workers, supra, a pre- Vaca case arising under the federal Labor

[ 505 Pa. Page 399]

Management Relations Act of 1947 (LMRA), 29 U.S.C. § 185, this Court considered the question of the employee's right to sue his employer in equity for wrongful discharge where the union has breached its duty of fair representation.*fn9 In Falsetti, the employee filed a complaint in equity against his former employer and named officials of his union for an alleged wrongful discharge from his employment. The employee sought reinstatement, restoration of his seniority rights and damages. Thereafter the union expelled him from membership. The employee then amended his complaint to also allege wrongful expulsion from union membership. Initially, we determined that the employee misjoined the causes of action. We then held that the trial court lacked jurisdiction of either claim.

In addition, we held that the employee could not maintain a cause of action against his union officials for breach of their duty of fair representation. Instead, we said such a claim was limited to an action against the union itself for breach of its "fiduciary obligation." In holding that Common Pleas lacked jurisdiction of the employee's claim against his employer, we determined that the enforcement of third-party rights under the collective bargaining agreement between the International Union and the Company must be derived solely from the agreement itself. We stated:

We have carefully read the entire Agreement and can find no provision which authorizes appellant to enforce it. Although the seniority provisions relied upon inure directly for the benefit of the appellant-employee and do not exist simply to protect the interests of the Union, appellant's

[ 505 Pa. Page 400]

cause of action is precluded by a contractual grievance and arbitration procedure which, by its very terms, limits access thereto to the Union. The parties in drafting this Agreement provided for a simple expeditious and inexpensive grievance procedure to be administered by persons intimately familiar therewith. The procedure outlined was designed not only to promote settlement, but also to foster more harmonious employer-employee and employer-union relations. The parties expressly sought ...

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